Banking battered

THE accusation levelled at Standard Chartered bank could hardly be more grave. If it is proven that it was complicit in hiding some £160bn associated with terrorist groups and Iran, the already battered reputation of the banking industry will sink to new depths.

The damning charges levelled by industry regulators in New York that Standard Chartered is a “rogue institution” that profited from associations with those whose stock in trade is murder, and a regime that threatens the stability of the Middle East with its nuclear programme, once again raise profoundly disturbing questions about what exactly has been going on in the City of London, coming as they do so soon after HSBC was accused of allowing drug cartels and rogue states to launder money and the reputation of Barclays was destroyed by the interest rate rigging scandal.

It must be noted that Standard Chartered has robustly denied the allegations against it. Nevertheless, investors have been sufficiently disturbed for the bank’s share price to suffer, and for the wider world it reinforces the impression of an industry that contained players who were out of control, devoid of any sense of morality and so driven by greed that they would engage in the most reprehensible behaviour.

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It is in Britain’s interest to have a healthy and profitable banking sector. Equally, that sector must not only behave in an ethical manner, but be seen to be doing so if it is to recover the confidence of investors. It is no coincidence that savers are putting their faith in the mutual sector, which has behaved with honour and honesty. There are lessons here for the banks. In the interim, if the allegations against Standard Chartered are found to be true – and for now, it is an if – it should face the most severe penalties that the regulatory regime has at its disposal.